The capital of each company is regulated in detail by Parliament. It is an al most invariable rule that not more than one fourth of the total shall be borrowed money, which you call loans and we call debentures. Railway debentures are consequently among the safest of investments and sell at a price only a very little below that of consols. Of the share capital usually from one-third to one-half is in the shape of non-cumulative preference shares bearing a fixed rate of interest. The remainder is ordinary stock. But ordinary stock in Eng land, where traffic varies little from year to year, and where railways are complete and fin ished before they are first opentd for traffic, pays an almost unchanging dividend from year to year, averaging about per cent. And preference shares accordingly are regarded as practically nearly as safe as debentures. Rail way stocks of all kinds, debentures, preference or ordinary, were till about 17 years ago the most favorite investment for the savings of the bulk of the people. Since the beginning of this century there has been a marked change. This is partly due to an external cause — the in creased value of money in the market — but much more is it due to internal causes. Con stant pressure for lower rates and improved service by the public, constant demands for higher wages are made in England, as in all other countries. But there is more than this. For a long period, while American railways were ploughing their earnings wholesale into the road and Continental railways were forming sinking funds or paying off terminable annuities, English railways were thriftlessly financed. They divided up to the hilt, formed no reserves and charged every betterment to capital. Of recent years there has been a great change for the better. Property is being improved out of income, reserves are growing. But meanwhile the shareholders are paying, in reduced dividends and still more in reduced salable value, for the financial errors of the past. Stocks of some of our great companies, which 20 years ago stood at or near 200 can to-day be bought at about par. And yet meanwhile the dividends will have
only fallen from 7 per cent to 6 per cent or from 6 per cent to 554 per cent. The former price was undoubtedly too high. The present price is probably too low and at the time of writing recovery seems overdue.
The total paid-up capital of the companies at the end of 1914 was #1,334,011,000 ($6,670, 055,000), of which about 15 per cent represents nominal additions due to consolidation, conver sion or division of stocks.
One other point of contact between England and the United States may • be noted in conclu sion. Between them they are responsible for the original invention of railways, and for every important improvement in railway methods and practice that has been introduced since. There are some students of railroad history who, spite of the fact that the nations of continental Europe are more and more going over to na tional ownership of railways, believe that this is no accident, but rather a natural result of the Anglo-Saxon habit of leaving to private enter prise the utmost freedom which practical ex perience shows to be cornpatible with the wel fare of the nation at large.
Findlay, 'Working and Management of an English Railway' (London; 4th ed., 1891) ; Pratt, 'Railways and Their Rates' (London 1905) ; Acworth, 'The Railways of England' (London; 5th ed., 1900) • Browne and Theobald's 'Law of Railways' (London ; 3d ed. 1899) ; Paish, 'The British Railway Posi tion' (The Statist, London 1902); Cleveland Stevens, 'English Railways: their Development and their Relation to the State' (London 1915); Lawson, W. R., 'British Railways : a Commer cial and Financial Survey' (London 1913).
W. M. Acwoirrit, Formerly Lecturer on Railway Economics in the London School of Economics and Political Science; Member of various Royal Commis sions and Committees an Railways Matters; Author of 'The Railways of England,) etc.